Financial & Valuation Modeling
Financial Statement Modeling Basic Excel techniques and keyboard shortcuts The most accurate way to perform Excel s basic functions without the mouse Customize Excel s default settings for effective modeling Standard modeling structures and formulas Best practices in modeling Learn the correct way to check models for errors, accuracy and integrity Check and fix circular reference and iteration problems (#REF) Tools for formula checking and auditing Create a ratios page Prepare a model for distribution Learn summary and sensitivity analysis using data tables Learn to build projection drivers Learn to integrate assumptions into financial models learn what makes a good assumption Build core statements: o Cash flow statement
o Balance sheet o Income statement Build supporting schedules: o Debt schedule o Working capital o Interest schedule o Retained earnings o PP&E analysis Understand the interconnectivity of the core financial statements and learn how the cash flow statement, income statement, and balance sheet are linked. Learn to apply automatic balance checks Understand treatment of non-recurring charges and tax implications on financial models Understand implications of new FASB regulations on financial models used by investment banks and other financial institutions.
Valuation Overview & DCF Modeling Learn market-based valuation, including comparable company analysis and comparable transaction analysis using appropriate equity and enterprise value multiples (PE, EV/EBITDA, etc.) Intrinsic valuation, including DCF and LBO (floor) valuation Presentation of valuation results using sensitivity analysis and data tables Participants learn to identify and analyze the elements of the financial statement that are key to the value of an enterprise, including: o Market capitalization o Enterprise value o Options o Preferred stock o Minority interests o Debt o Cash and marketable securities o Treasury Stock Method of Calculating Diluted Shares Outstanding
Use previously built model to derive unlevered earnings and unlevered free cash flow Handle working capital items, deferred taxes and long-term accruals Learn how to derive a discount rate by deriving the cost of debt and the cost of equity Derive the cost of capital using CAPM Select the correct discount rates Estimating terminal value Calculating enterprise value Using the enterprise value to determine implied share prices Analyze key input assumptions at various sensitivities
LBO Modeling. Participants will learn typical deal structures of leveraged buyouts, along with current market metrics. They will then structure an Excel model for the valuation and analysis of an LBO transaction in-line with those typical deal benchmarks using a real life case study The LBO analysis will be driven off an integrated, dynamic three statement pro forma LBO projection model Participants will learn how to model the typical instruments of LBO financing, including cost assumptions and sources and uses of funds Learn to insert a revolving credit facility and cash sweep, integrate industry standard treatment of senior notes, PIK instruments, and preferred equity and equity Identify and error-proof the circularities and iteration problems inherent in an LBO model Participants will build the sensitivity tables required for correct analysis of an LBO, including the construction of multiples, and IRR tables using both data tables and various sorting functions in Excel, including VLOOKUPS, OFFSET, CHOOSE, and INDEX. Participants will design different scenarios for their LBO model, including: Base/Best/Worst Case
Mergers & Acquisitions (Accretion/Dilution) Modeling Setting up a control area for assumptions Inputting deal assumptions (% cash vs. stock considerations, purchase premium, asset write-ups, advisory fees, financing fees, and severance fees) Calculating shares outstanding using the treasury stock method Appropriate treatment of convertible securities Allocating purchase price and calculating goodwill Preparing the pushed-down balance sheet Making pro forma balance sheet adjustments Calculating sources & uses of funds Inputting operating & synergy projections Calculating the stub year period Building a pro forma income statement and making appropriate deal-related adjustments to arrive at accretion/dilution per share Error-checking a merger model and inserting circuit breaker switches where appropriate Sensitivity analysis: EPS accretion/dilution in stock vs. cash deal; interest rate assumptions, premium paid Pre-tax synergies required to break-even, and break-even PE analysis Revenue, EBITDA, and Net Income contribution analysis
Understanding the differences between asset sales (including 338h10 elections) and stock sales Taxation issues, including deferred taxes created by the step-up of asset values Legal considerations in acquisitions
Trading & Transactions Comparables Modeling Learn to select appropriate comparable companies by evaluating operational, financial, size, and other similarities Set evaluation benchmarks & select comparable companies Gather appropriate financial history and projections Normalizing operating results and calculating LTM operating results to reflect nonrecurring charges and stock option expenses Standardize various expense classifications including FIFO to LIFO inventory accounting Calculate shares outstanding using the treasury stock method Input financial data & calculate and interpret financial and market ratios Presenting trading comps by structuring output schedule Selecting key valuation multiples using the VLOOKUP function and generating multiple tables Similarly to trading comps, participants set evaluation benchmarks, select precedent transactions, gather appropriate financial details, input financial data, and calculate and interpret financial and market ratios Calculating purchase premiums Understanding pricing structures (fixed vs. floating, collars, and walk-away rights) Best practices for incorporating synergy assumptions and appropriately calculating unaffected pre-deal share prices